Title Insurance and Quitclaim Deeds

March, 05 2018

Most homeowners will have to deal with a title company and title insurance in some form or fashion during the home buying process. But what if your deed isn’t a normal deed but instead is a quitclaim deed? How will title insurance work then? In this blog post, we will cover the ins and outs of quitclaim deeds, and help you to understand how a title company will handle a quitclaim.

First, What is a Quitclaim Deed?

To understand the relationship between title insurance and a Quitclaim deed, we must first understand the inner working of a quitclaim deed. A quitclaim deed transfers ownership of your interest in a property to someone else. It’s actually in the name: quit – claim. You are quitting your claim on the property and passing it onto someone else. What makes this deed different from others is that it offers no guarantee on the health of the title.

What Makes a Quitclaim Different for Title Insurance?

The main differentiator of a quitclaim deed in the eyes of the insurance company is that a quitclaim deed doesn’t carry with it a guarantee the real estate title is free of issues. This, means the deed is being passed of “as-is”. Like buying a car “as-is” there could be potential issues. Obviously, this doesn’t mean there are issues because a quitclaim is commonly done between people who know each other. But the risk is still there.

So Can I Obtain Title Insurance with a Quitclaim Deed?

No. The answer is usually no. This is because the deed’s format is one which is expressly written to not guarantee the property. If you want to obtain title insurance, it’s best to simply not use a quitclaim deed in the purchase.

The Title Search

So why won’t title companies work with a Quitclaim deed? We’re not saying all insurance companies won’t work with a quitclaim deed, but those that don’t it is commonly because there is no title search performed. There’s no way to accurately see if the title has an liens or encumbrances associated with it.

Should You Use a Quitclaim Deed?

Quitclaim deeds have their purposes. For example if you’re obtaining a home from a trusted relative or spouse. They provide easy and effective transfer of property, but the risk is there is no guarantee. Someone could effectively transfer a property to you using a quitclaim which they have absolutely zero interest in and then take your money and run. So, in short, it’s best to avoid the quitclaim unless you’re sure of the property’s title situation.

For more information on title insurance, and your options with a quitclaim deed, get in touch with the closing specialists at Armour Title Company, today!